NEW YORK, N.Y. – The volatile trading that defined 2015 led to a very choppy market for companies wanting to go public.
The number of U.S. companies that successfully made an initial public offering of stock in 2015 dropped by more than 40 per cent compared with 2014, according to a report by IPO research firm Renaissance Capital.
The amount raised was considerably less as well, falling to $30 billion in 2015 from $85.3 billion. The drop-off was the result of significantly reduced ambitions from companies as they hit the market, as well as wariness of investors rattled by sharp swings on Wall Street, particularly in the second half of the year.
The August downturn and a U.S. market correction in September convinced a lot of companies to put their plans to go public on hold, Renaissance Capital said.
“For the first eight months of the year, the IPO market was on target to reach over 200 IPOs with solid returns, but went into a tailspin in August and September that wiped out positive performance, drove abnormally high IPO discounts and brought issuance to a near halt by year-end,” the firm said in its report.
IPO activity stalled not only in the U.S., but around the world. The amount of money raised in IPOs globally was $156.2 billion, down 35 per cent from a year earlier. Asia was still a significant driver, even with the problems in the Chinese stock market. That was due largely, however, to the initial public offering of Japan Post, which took its bank, insurance and holding companies public in three separate transactions in October. That combination IPO raised $12 billion.
The industry that had the largest number of IPOs was health care, followed by energy. Technology IPO activity dropped considerably in 2015, with only 23 companies raising $4.2 billion, compared with 55 companies raising $32.3 billion in 2014.
Even the mega-IPOs that tend to generate investor and media interest evaporated this year.
The largest IPO of 2015 was First Data, which raised $2.56 billion. But even that was a struggle and it had to be dialed back. It was an especially paltry showing when you consider that the previous year, Chinese online shopping portal Alibaba held an IPO and raised an eye-popping $22.03 billion. Alibaba shares are down 22 per cent this year.
In a separate report, investment banking research firm Dealogic showed that the investment bank that helped raise the most money and take the most companies public was JPMorgan Chase, followed by Goldman Sachs and Morgan Stanley.